James Bannon (Fine Gael)

Sugar beet has long been an important part of the tillage sector, contributing to the economic and social development of rural Ireland since 1926. For those lucky enough to hold contracts, beet is a critical component of profitability, being much more valuable than alternate tillage crops.

However, we now face radical reforms of the EU sugar regime, the first since it was established in 1968. This will strengthen the EU's hand in the current round of world trade talks. However, these proposals must be fought tooth and nail at EU level, including the cutting of sugar support prices, reducing production quotas, decreasing export subsidies and the introduction of partial compensation. These proposals provide for reforms to commence in 2005, rather than 2006, as provided under current regulations. A cut of 25% in the price of beet in 2005-06 is provided for and a 37% cut, plus a European quota reduction of 2.8 million tonnes or 16% over four years, is provided for in 2007. Ministers from Spain, Italy, Latvia, Lithuania, Estonia, Finland, Greece, Hungary, Portugal and Ireland are opposed to the reforms. It is important that these countries work together to block these proposals. I am glad that the newer EU member states are on side with Ireland on this issue. It is imperative for the Government to ensure the EU designates sugar as a sensitive product, subject only to minimal tariff reduction, as has already happened for dairy and beef products from Ireland.

Pre-empting the EU proposals and anticipating their negative effects on the industry, the decision by Greencore to close its Carlow plant from March 2005, with a loss of 300 jobs, is definitive proof of the threat posed by the EU proposals and their effects on sugar beet production. If the EU proposals go through in their current form, they could lead to the inevitable end of sugar production in Ireland. An impact assessment carried out by the European Commission into the proposed reforms points out that Ireland is one of the most vulnerable countries. A senior Commission official indicated to my colleague, Ms Mairéad McGuinness, MEP, that there could be no sugar industry in Ireland after the reforms.

The implications of the reforms on the workers in countries such as Brazil must also be considered. The Brazilian sugar crop topped 26 million tonnes in 2004. Brazil, Thailand and Australia are the largest exporters in the world. Ireland is permitted to produce 199,000 tonnes of sugar. Consumption of sugar in Ireland for 2003 was approximately 158,000 tonnes and the actual figure for production in that period was 223,746 tonnes. The dark side of the industry in Brazil is that it is controlled by 100 growers who use what can only be described as slave labour from Mexico to harvest the crop. In doing so, they destroy rain forests to expand their crop bases. There are concerns in Brazil that the reforms would allow already environmentally unsustainable sugar production to expand even further to the detriment not only of the environment, but also of the many low-paid workers. In many European countries, the sugar industry has been decimated, giving companies like Greencore the perfect excuse to cut costs and restructure a business that has become extremely profitable for all concerned.

Union leaders, farmers and local politicians, including Senator Browne, claim that Greencore's pre-emptive move has weakened Ireland's hand in the EU reform negotiations. In the light of this shocking closure, Greencore must ensure its employees suffer no disadvantage on account of its decision to close the Carlow plant and move all its beet processing to its Mallow plant. Farmers who have been growing beet for the Carlow plant will now have their crops taken by rail to the Mallow plant. It is imperative that they should not be penalised by having to meet the extra cost involved in transporting their beet to the Mallow plant. Under EU regulations, Irish Sugar pays transport costs of up to a maximum of €7 million. However, this is not likely to cover the increased transport cost incurred, with 48% of Ireland's sugar beet being transported to Mallow by rail. This replaces the 12%, which was transported in this manner last year.

Up to 189 full-time and 137 seasonal jobs will be axed at the Carlow plant, with 35 full-time and 16 part-time jobs going to the Mallow plant. Total employment will be cut from 614 jobs to 288, with 63 jobs remaining in Carlow in sales, marketing, packaging and other areas. Members on this side of the House ask the Minister of State at the Department of Agriculture and Food, Deputy Brendan Smith, to open negotiations with Greencore to urge it to reconsider its decision and take no further action on this matter until the EU reforms on the sugar quota have been concluded. He must realise that the decision to close this plant after 79 years is a devastating blow for Carlow town, the workforce and the sugar beet industry. Local farmers gave loyalty for many years to the company. Such a decision is premature and detrimental to both Carlow and the economy as a whole. There is also the danger that the decision has made Greencore vulnerable to a take-over threat which, if it were to succeed, with the transfer of the Irish sugar quota, would see the ownership in the hands of foreign investors. Their focus would be on a quick return, not on the viability of Irish beet production. It is essential that the Minister of State clarifies ownership of the sugar quota and takes all necessary steps to retain it for Irish growers. The IFA is totally opposed to the transfer of national quotas between member states. The Minister must introduce legislation to legally vest the ownership of Ireland's sugar quota in the hands of the beet growers.